China starts economic recovery with 3.2pc quarterly growth

China has become the first major economy to return to growth since the coronavirus started sweeping across the world.

In sequential terms, China’s second-quarter growth in GDP represented an 11.5 per cent rebound from the first three months of the year. Picture: AFP

China has become the first major economy to return to growth since the coronavirus started sweeping across the world.

On Thursday, China said its economy grew 3.2 per cent from a year earlier in the second quarter as authorities benefited from an aggressive campaign to eradicate the virus within its borders.

In sequential terms, China’s second-quarter growth in GDP represented a 11.5 per cent rebound from the first three months of the year, according to data released by Beijing’s National Bureau of Statistics. For the first six months of the year, China’s economy contracted just 1.6 per cent compared with the first half of 2019.

The growth figure for the second quarter beat a median estimate from economists for 2.6 per cent growth and was at the top end of an unusually wide range of forecasts, from a contraction of 3.1 per cent to growth of 3.5 per cent. It followed a historic 6.8 per cent contraction in the first three months of the year, when Beijing shut down the country in late January as the coronavirus spread across China from the central city of Wuhan.

 

“The national economy overcame the adverse impact of the epidemic in the first half gradually and demonstrated a momentum of restorative growth and gradual recovery,” the statistics bureau reported.

The second-quarter recovery followed a string of data points that suggested China’s economy had turned a corner. Manufacturing surveys have shown a steady recovery in sentiment over the past three months. And China said this week that exports and imports had returned to growth in June for the first time since the outbreak.

The rebound came in a quarter when China appeared to bring the virus under control. In early April, it ended its 77-day lockdown of Wuhan, a city of 11 million. It responded forcefully to subsequent resurgences, including one that emerged in a Beijing wholesale market last month, testing millions within weeks and restricting travel in and out of the capital. As of Wednesday (Thursday AEDT), it had recorded 10 consecutive days without a local transmission.

The question now for Beijing policy makers is whether the rebound can sustain itself through the coming months with only the modest stimulus measures that have been put in place, particularly as the US struggles to rein in record numbers of new cases.

A prolonged recession in the US would hurt demand for Chinese goods in their most important export market, while the persistence of new virus cases around the world could keep much of the global economy in a state of paralysis for months, weighing on growth prospects.

Separately, the country has been dealing with its worst flooding in recent memory.

THE WALL STREET JOURNAL